City of Houston SustainablePensions

Dear Houstonians,

They said it couldn't be done; but in Houston, we always get it done. Houstonians came together and achieved historic pension reform, lifting a significant barrier to progress in our city. Our victory on pension reform is substantial. We immediately reduced a debt of $8.2 billion and put in place a responsible plan to pay off the balance over 30 years - just like the mortgage on a house. The plan also requires the city to make the payments in full and on time - just like every Houstonian with a mortgage is required to do - and protects the city from cost increases due to economic downturns.

The new law requires annual Risk Sharing Valuation Studies (RSVS) to determine the city’s contribution rate.

We began 2017 by bringing a deal, negotiated in Houston between the City and employee groups, to the Texas Legislature. The Legislature passed pension reform for the first time in decades, but required voter approval of pension obligation bonds, a critical component of the reforms. In November, Houston voters approved the bonds by a 3-to-1 ratio. We ended 2017 by completing the issuance of those bonds.

We thank our city employees, our state legislators, the Houston business community and, most importantly, the voters of Houston for making this happen. The pension crisis in Houston is no more. We can now move on to what will lift up our families, our neighborhoods and our city!

What the Experts are Saying

The Solution

Real Numbers for a Real Solution

  • For the first time, the pension boards are opening their books. All gains and losses will be recognized.
  • The solution implements a more realistic rate of return of 7 percent, which is in line with national standards.
  • After recognizing all our gains and losses and using a more realistic rate of return, we know that our real unfunded liability is $8.2 billion. Only by using real numbers do we understand the true extent of the problem, and only then are we able to fully address it.
  • The City had borrowed more than $1 billion from pension systems. To pay back the debt, the City has issued pension obligation bonds, which voters passed in November 2017 with more than 75 percent of the vote.

Why It's Called a "National Model"

  • Under the old plan, if investments did not meet expectations, the City had to make up the difference. The solution implements a "cost corridor" so that the City's contributions are capped. If investments perform too far below established levels, the pension boards will cut benefits or increase employee contributions to bring costs in line.
  • Houston's pension systems were in open amortization - we would never pay off the debt. The solution places the systems in closed amortization - we treat the debt like a mortgage, paying it off in 30 years.
  • There are no new taxes needed for the City to meet its obligations. The solution is budget neutral.

Newsroom chevron_right

How reforms took Houston's pension systems from an $8.2 billion crisis to a more stable footing

For nearly two decades, Houston's pension systems served as a drag on the city budget and an even grimmer stain on its financial health. Ill-advised increases ...

Houston Chronicle • 01.31.2023

Appeals court upholds Houston’s pension reform in challenge from firefighters

A state appeals court on Tuesday tossed out a ruling that jeopardized part of Houston’s pension reform plan, reversing a victory the firefighters’ pension board had scored in late 2020.

Houston Chronicle • 08.31.2022

Rahm Emanuel Says Mayors Are Democracy's Real Engines Of Change

NPR's Scott Simon talks to the former Chicago mayor and Obama official about his new book, "The Nation City: Why Mayors Are Now Running The World."

The New York Times • 02.22.2020

Appeals court sides with Mayor, Houston in firefighter pension reform lawsuit

Texas’ 14th Court of Appeals on Thursday sided with the city of Houston in a lawsuit over Mayor’s pension reform plan, which the Houston Firefighters’ Relief and Retirement Fund ...

Houston Chronicle • 06.20.2019


Texas House concurs on Senate Bill 2190

Lege TV

The Texas House of Representatives takes its final vote concurring on changes to Senate Bill 2190, the Houston Pension Solution.

Texas Senate passes Senate Bill 2190

Lege TV

The Texas Senate votes to pass Senate Bill 2190, the Houston Pension Solution.

Supporting Documents